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Published on January 23, 2025
New York's AG Letitia James Lands Knockout $1 Billion Blow Against Predatory Lenders in Epic Win for Small BusinessesSource: Google Street View

In a significant move to aid besieged small businesses, New York Attorney General Letitia James has announced a $1 billion settlement with a collective of predatory lending companies, including Yellowstone Capital and parties at the helm. James has secured monumental debt relief, topping $534 million, and restitution payments for businesses entrapped by severe high-interest loans that jeopardized their financial stability and operations.

The settlement follows a probe by the Office of the Attorney General (OAG) into Yellowstone's exploitative practices, uncovering that these so-called merchant cash advances were stealth high-interest loans with rates scaling to an egregious 820 percent per year. Attorney General James criticized Yellowstone for compelling "successful companies to close" and for throwing "New Yorkers out of work." Her office's actions put a decisive end to these loans. As noted by the Attorney General, "Their predatory loans forced successful companies to close and put New Yorkers out of work."

Notably, over 1,100 New York-based small businesses felt the sting of Yellowstone's predatory tactics, which will now be mitigated through the comprehensive settlement. Among those are diverse firms such as a Buffalo food truck, a Syracuse hair salon, and a Long Island tailoring shop. The deeply affected Manhattan bakery, City Bakery, highlights the devastating impact, being coerced to shutter after nearly three decades when locked in a debt spiral by Yellowstone's untenable financial products.

Further cascading the judgment, Yellowstone's leadership, Isaac Stern and Jeffrey Reece, together with affiliated entities, pressed forth a $16.1 million immediate restitution payment, contributing toward the residual $514 million judgment. Additionally, stern measures ensue with a full industry ban imposed on the companies and their officers. For the affected businesses dealing with court judgments or liens from Yellowstone seeking resolutions, guidance will be mailed with directions to make their requests over the coming six months—details on which can be further perused on OAG's website.

The settlement stands as the latest in a series of actions by Attorney General James directed at protecting small businesses from unethical practices. Previous crackdowns include a $77 million judgment against Richmond Capital Group and the shakedown of fraudulent websites in 2023. The OAG team, led by Assistant Attorneys General Adam J. Riff, Dami Obaro, former Assistant Attorney General John P. Figura, and Attorney General Fellow Emily E. Smith, under supervision from Bureau Chief Jane M. Azia and Deputy Bureau Chief Laura J. Levine, exemplified dedication to safeguarding the backbone of the local economy—its small businesses.